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You recently purchased a stock that is expected to earn 20 percent in a booming economy, 10 percent in a normal economy, and lose 30
You recently purchased a stock that is expected to earn 20 percent in a booming economy, 10 percent in a normal economy, and lose 30 percent in a recessionary economy. There is a 5 percent probability of a boom and an 80 percent chance of a normal economy. What is the expected rate of return and standard deviation on this stock?
Kindly show your work and don't use excel.
Much thanks in advance
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